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Truist Securities on Wednesday downgraded packaging companies Berry Global (NYSE:BERY) and Crown Holdings (NYSE:CCK) to 'Hold' from 'Buy' based on recent performance and near-term outlooks.
The brokerage says BERY stock is going to be largely range-bound due to its recent deal announcement, while leverage will remain elevated post-deal, and volume weakness will continue.
Truist Securities trimmed the price target on Berry Global (BERY) to $68 from $75, and said, the rationale for the Glatfelter (GLT) deal "was predicated on a lack of outright buyers for HHS and desire by CEO Kevin Kwilinski to focus on BERY’s core business without any distractions."
"Our sense is that investors would have preferred an outright sale, even if that required an extension of the sales process, with BERY using the additional time to improve HHS ops / EBITDA and drive greater buyer interest and a higher EBITDA multiple," analysts Michael Roxland and Niccolo Piccini wrote in a note.
On a year-to-date basis, Berry shares have lost more than 12%, while CCK has shed about 16%.
Turning to Crown Holdings (CCK), analysts said, the company has become a “show-me” story until it delivers more notable EBITDA and earnings improvement, and addresses issues with some of its ancillary, non-core businesses.
The price target was trimmed to $88 from $100, arguing that, in 2024, overall segment income is likely to be in line with 2023 as better growth in its beverage and transit segments, and ~$15mn in restructuring-related benefits (repeats in 2025), offset a combined ~$80mn headwind.
The brokerage expects CCK’s North American volume growth to be more muted beginning in 2025, stating, it doesn't anticipate further market share gains.
Seeking Alpha Quant Ratings has a 'Hold' on both of the stocks, with a score of 2.75 and 2.59 for BERY and CCK, respectively.